Mothercare plc, the leading international mother and baby retailer, issues the following trading update, which covers the 12 and 40 week periods to 4 January 2014.
Overview for 12 weeks to 4 January 2014
- Worldwide network sales were down 4.4% with Group reported sales down 6.1%
- International has been negatively impacted by currency deflation and weaker than expected economic conditions in some of our key markets, resulting in lower royalty revenues
- In the UK, the highly promotional nature of the Christmas period and lower seasonal footfall have impacted both sales and margin, but stock remains closely managed
- We remain cautious about the outlook for consumer expenditure and currency deflation for the rest of the year and therefore full year profit expectations are now below the current range of market forecasts.
Simon Calver, Chief Executive of Mothercare plc, said:
“Difficult UK retail trading conditions and volatility in some of our International markets resulted in weaker than expected worldwide network sales this quarter.
“In the UK, our stores suffered similar Christmas trading pressures to those reported elsewhere. Customer service scores continue to improve year on year but weaker footfall and higher promotional activity led to lower sales and margins.
"Our focus on multichannel has helped mothercare.com to perform well with sales through this channel up over 15% and click and collect continues to perform well. However, our decision not to repeat last year’s free delivery offer combined with a weak toy market impacted elc.co.uk sales, which resulted in Direct in Home experiencing a reduction during the quarter.
“International was impacted by currency deflation reducing the reported rate of growth and by heightened economic volatility. In some of our larger markets such as Russia and the Middle East we have also experienced some unseasonal weather which impacted sales. Trading has been improving more recently.
“As a result of lower UK sales and margin and the International currency impact, full year profits are likely to be below the current range of market expectations. We continue to focus on delivering a turnaround in the UK and exploiting the global growth opportunities for Mothercare.”
Aside from matters consequential to the financial performance disclosed in this statement, there has been no material change in the underlying financial position of the business since the beginning of the period.